Joint Ventures

Sanofi is teaming with Verily on a $500M JV aimed at marrying tech with diabetes drugs

A year after the pharma giant Sanofi $SNY agreed to collaborate with Verily Life Sciences (formerly Google Life Sciences) to spawn a new tech platform for managing diabetes, the global companies are following up by establishing a new joint venture that will be tasked with accomplishing the alpine goals they’ve set out for themselves.

Joshua Riff, Onduo

Joshua Riff, Onduo

Based in Kendall Square — ground zero in the global biotech hub in Cambridge, MA — the new Onduo will be led by Joshua Riff, a veteran of the U.S. managed care world, where disease management has become a core focus for some of the country’s biggest insurers.

Onduo will tackle a global market, looking to wire millions of patients with miniaturized electronics and software in a way that will make it easier to monitor and control diabetes on a day-to-day basis. The chronic ailment has been exploding at a pandemic level, currently counting some 400 million victims. And the new company, godfathered by multinational companies with hundreds of billions in market caps, will start out with a joint commitment of close to $500 million to make it all happen.

The next step will be to glean insights directly from patients and physicians, Riff tells me, tapping in on Sanofi’s global diabetes network. Verily will contribute its expertise on computer chips, deep analytics and machine learning, and start designing the microelectronics and software that will be needed to tie it all together, giving patients some direct feedback on how their lifestyle choices, exercise, drug use and more help manage diabetes.

“We believe you can take a disease like diabetes and take a different approach,” says Riff. “We approach it from a totally different angle and come up with different solutions.”

All the big players work to build relationships with patients. But if this is any kind of game-changer, it will take years to play out. And pressure continues to build on CEO Olivier Brandicourt, who just got beat out on the Medivation buyout, to do something with a bigger near-term impact than a JV startup.

Sanofi outlined the financing for Onduo in a statement to Endpoints News:

Sanofi has committed $248M to the venture, with Verily providing an equivalent capital contribution.  Onduo’s current financing strongly positions the company to execute on its near-term and long-term goals. At this stage, Onduo is not in the position to discuss the company’s specific cash runway or future financial plans at this time.

For Verily, operating under the big umbrella created for Google’s Alphabet, it’s a chance to take a leading role in the convergence of microelectronics and health. Verily has mapped out an ambitious effort in healthcare, and it’s collaborating with some of the biggest players in biopharma. Just weeks ago Verily signed a longterm pact with GlaxoSmithKline to develop electroceuticals, which are still in a preclinical phase of development. And there are also partnerships underway with Biogen (using wearables to test MS drugs) and J&J (in surgical robotics.)

For Sanofi, the partnership offers a chance to shore up its blockbuster diabetes franchise, where revenue has begun to erode. Fixing that predicament has become a top priority for Brandicourt since he was named to the helm 17 months ago. Sanofi is up against some tough rivals, including Eli Lilly and Novo Nordisk. And they all have carved out big market shares for a disease where one-third of patients are being treated properly, a third have been diagnosed and aren’t managing their disease, and a third that have never even been diagnosed.

At the same time, diabetes has been spreading fast, with more than 200 million patients expected to be added in coming years.

A lot of companies have been trying to solve the diabetes dilemma in different ways, says Riff, but once you get past the insulin that has been on the market, there’s not been tremendous progress.

Peter Guenter, Sanofi

Peter Guenter, Sanofi

So one of the world’s largest tech companies is partnering with one of the world’s largest pharma companies with this mandate: “Lets create an entity, take the development process toward understanding the disease and then find insights to lead to solutions to manage diabetes,” explains Riff.

Who pays for it? “Eventually anyone who pays for healthcare,” says Riff. And that’s a long and growing list.

For now, Riff says one of many immediate tasks is organizing the leadership group for Onduo and then building a staff. Just how many employees are expected, though, he isn’t saying right now.

Peter Guenter, Sanofi’s head of global diabetes & cardiovascular business unit, said:

“The integration of multiple interventions, such as data-driven patient support and devices in addition to treatment, can help improve outcomes, which is important from the perspective of patients, healthcare professionals and the overall healthcare system,” said  “The new company Sanofi and Verily invested in will adopt a more service-centric approach and support doctors in their efforts to treat their patients more effectively. In addition to developing innovative therapies for diabetes which will remain a key focus for Sanofi, we see these solutions which combine innovative therapies and services as the future for diabetes care. We believe this will help societies cope with the burden of this epidemic.”

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